U.S. inflation reached a record figure of 7.9% in February and tomorrow the U.S. Bureau of Labor Statistics will publish the data related to March.
Analysts are forecasting price growth of 0.5% on a monthly basis, while the YoY figure is expected to post a fresh multi-decade record between 8.3% and 8.5% (up from the 7.9% figure released last month).
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Later this week, the European Central Bank will hold its meeting, followed by the traditional press conference. Inflation, which jumped last month to 7.5% on an annual basis, is progressively changing the dovish stance of the ECB.
Investors are predicting rates to remain steady, while forward guidance could be more hawkish, reflecting the rally of inflation seen in the last few months. In this case, the euro could recover against the greenback and this could represent a positive element for the gold price.
Moreover, we should note that the technical scenario for gold is improving. The new week started with the gold price jumping above the key resistance of $1,950 an ounce and trying to leave the lateral trading range between $1,890 and $1,950 over the last few sessions.
This positive movement is confirming the growing bullish pressure already seen in the last few trading sessions when gold approached the $1,950 threshold without being able to remain above it at the end of the day.
Therefore, this movement can be read as an improvement of the momentum and a clear surpass of the $1,950 mark could open space for further recoveries, confirming the bullish trend.
Of course, the war between Russia and Ukraine – which is becoming a long-term problem – will remain a key catalyst while the sanctions against Russia could further exacerbate inflation.
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Carlo Alberto De Casa is an external Market Analyst for Kinesis Money.
He also writes as a technical analyst for the Italian newspaper La Stampa.
Carlo Alberto provides regular commentary for UK outlets including the BBC, Telegraph, the Independent Bloomberg & Reuters. He is also a commentator for CNBC Italy. He worked for Bloomberg as their Equity Research Fundamental Analyst before joining brokerage ActivTrades in 2011 to specialize in currency markets and commodities. In 2014 he published a book on gold and the gold market, followed by a new updated edition in 2018.
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